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Is Kinetics Small Cap Opportunity No Load (KSCOX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research

On the lookout for a Global - Equity fund? Starting with Kinetics Small Cap Opportunity No Load (KSCOX) should not be a possibility at this time. KSCOX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that KSCOX is a Global - Equity option, an investment area loaded with different options. While Global - Equity mutual funds invest their assets in large markets--think the U.S., Europe, and Japan--they aren't limited by geography. Their investment technique is one that leverages the global economy in order to offer stable returns.

History of Fund/Manager

Kinetics is based in Sleepy Hollow, NY, and is the manager of KSCOX. Kinetics Small Cap Opportunity No Load made its debut in February of 2003, and since then, KSCOX has accumulated about $232.29 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 8.59%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 21.9%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 9.87%, the standard deviation of KSCOX over the past three years is 15.02%. The standard deviation of the fund over the past 5 years is 15.67% compared to the category average of 10.08%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In KSCOX's case, the fund lost 67.05% in the most recent bear market and underperformed its peer group by 14%. This might suggest that the fund is a worse choice than its peers during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. KSCOX has a 5-year beta of 0.95, which means it is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -0.89, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, KSCOX is a no load fund. It has an expense ratio of 1.64% compared to the category average of 1.12%. From a cost perspective, KSCOX is actually more expensive than its peers.

This fund requires a minimum initial investment of $2,500, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Kinetics Small Cap Opportunity No Load ( KSCOX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Kinetics Small Cap Opportunity No Load ( KSCOX ) looks like a poor potential choice for investors right now.

Don't stop here for your research on Global - Equity funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare KSCOX to its peers as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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